The Council of Ministers approved a budget variance of € 55 billion with the deficit overrun to 10.4% of GDP. “It is one of the greatest maneuvers ever, necessary to carry out the shock treatment needed to face this phase of difficulty that the country is going through,” said the Undersecretary of State to the Prime Minister Riccardo Fraccaro
by Nicola Barone
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4 ‘of reading
After almost three hours of meeting, the yes to Def arrived from the Council of Ministers. The report to the Chambers was also approved to request authorization for the budget variance, amounting to € 55 billion with the overrun of the deficit at 10.4% of GDP. It is “one of the greatest maneuvers ever, necessary to carry out the shock treatment needed to face this phase of difficulty that the country is going through” commented the Undersecretary to the Prime Minister Riccardo Fraccaro.
Covid-19 “black swan” of the economy, without GDP at + 0.6%
The new macroeconomic framework drawn by the executive in the Economic and Financial Document is composed of figures from the post-war scenario, given the uncertainty of putting black and white figures in such a friable context. «If the black swan of the epidemic crisis had not materialized, the Italian economy could have recorded a steadily improving pace of growth in the current year. This recovery would have led to a modest expansion in the first quarter of the year, making the annual growth forecast of 0.6 percent formulated in the Nadef of September 2019 achievable “, reads the draft on which the ministers reasoned.
The reflection of the emergency on public finances
According to all scenarios, the virus will have lasting consequences on the economy that will not run out before the first quarter of next year. Until then, ahead of forced marches with social distancing and security protocols to avoid the rekindling of new outbreaks that would have no other effect than the worsening of an already heavily compromised framework.
Worst decline in March, third quarter GDP rebound 9.6%
“Data on electricity production and consumption, transport and electronic invoicing testify to an unprecedented drop in economic activity.” This is what we read in the draft of the Def. In the estimates
«The month of March would record the strongest economic downturn, followed by a further contraction in April taking into account the decision to maintain in force the measures to combat the epidemic adopted in the second half of March. This would be followed by a partial recovery of GDP in May and June, allowed by the gradual relaxation of the control measures currently in force “. The contraction of GDP on a quarterly basis “would amount to 5.5 percent in the first quarter and 10.5 percent in the second quarter. These very strong falls would be followed by a rebound of
9.6 percent in the third quarter and 3.8 percent in the fourth, which however would leave the GDP of the last quarter at a level of 3.7 percent compared to the same period of 2019 “. The forecast for the year is -8%.
Income down 5.7%, resumed in 2021
In 2020, the income of employees in Italy will decrease by 5.7%, also due to the massive recourse to layoffs, but the reduction will still be more contained than that of household expenditure, whose propensity to save will increase exceeding 13 percent every year. These are some of the estimates contained in the draft of the
Def. Revenues are set to rise again in 2021, with a
4.6% increase
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